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The problems faced by the for-profit university operator Education Corporation of America have multiplied in recent years.
His registration dropped. He stopped making one-time payments on his debt. And it's about fighting evictions from many places, as creditors continue their judgments against society.
This week, ECA told a federal judge that it could not carry out a learning process (process allowing students to complete their studies or transfer credits elsewhere) to two dozen campuses. on the verge of being closed unless an unusual restructuring plan is approved. In a lawsuit naming the Secretary of Education, Betsy DeVos and his department, as defendants, the company has hinted that the government could face numerous claims for loan repayments. 39 students attending these campuses without the plan being in place.
Higher education institutions that go bankrupt are not allowed to receive Title IV student assistance, including scholarships and loans. The company took legal action to ensure that it could maintain access to federal assistance during the receivership process. His financial situation is so serious, he says, that it can not cover salary or other costs without these funds.
"It seems that ECA is on the verge of death," said Matthew Bruckner, a high school and bankruptcy professor at Howard Law School. "They say basically" without this receivership, we do not have money; we can not teach. "
The company operates several for-profit channels with campuses across the country, including Virginia College and Brightwood College. In the lawsuit filed in federal court in Alabama, ECA indicated that it had recruited about 20,000 students – although the complaint does not say whether this number refers only to Virginia College or to all of them. ECA establishments.
Last month, she announced her intention to phase out 26 campuses, about one-third of her total footprint, by December 2019. The company said it had taken this step because of declining enrollment in affected markets.
When a college is planning to close a campus, it needs to define what is called a teaching process allowing students still enrolled to finish their studies or transfer their credits to another institution. The lawsuit argues that without the restructuring plan in place – and continued access to Title IV – ECA will not be able to fulfill these obligations.
"If ECA's creditors did not act as intended in this application, it would almost certainly result in a messy and chaotic process that would cause irreparable harm to the interests of students and minimize recovery for all creditors," according to the report. complaint.
If the restructuring plan is approved, says ECA, a creditor, Monroe Lenders, has offered to buy the remaining 46 campuses and its management platform.
ECA did not respond to a request for additional comment on the prosecution.
A spokeswoman for the education department said the agency could not comment on an ongoing dispute.
A sudden closure of these campuses would be a new nuisance for students. This would also result in significant costs for the federal government with exit requests from closed schools – a process in which borrowers can apply for a loan waiver when their college closes suddenly while their degree is in progress.
But many ECA programs also have questionable track records of academic achievement that will not be helped by the teaching process, said Antoinette Flores, assistant director of post-secondary studies at the Center for American Progress.
"On the one hand, it's terrible that campuses are closed," she said. "On the other hand, it would mean continuing to allow Title IV funds to reach institutions whose academic quality is questionable. I do not think there is a win here for the students. "
In May, the Continuing Education and Continuing Education Accreditations Board rejected an application for approval from the Virginia College accreditor, citing low graduation and placement rates in part. The chain had applied for accreditation through ACCET in part because the status of its own accreditation body, the Accreditation Board for Independent Colleges and Schools, was in doubt.
The Obama administration has sought to shut down ACICS as an accreditor because of oversight failures. But after the organization had a second chance thanks to a court ruling, a senior official from the Education Department recommended last month to extend its 12-month federal recognition.
ACICS did not respond to a request for comment on the Court's trial. The for-profit channels run by ECA represent about half of the remaining colleges accredited through the organization.
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